Diversifying Your Farming Business – Where To Start?

As we move towards 2027 and BPS payments are phased out, with the exact outcome of the Environmental Land Management Scheme (ELMS) remaining unquantified, many are left wondering how they will fill this funding gap. As such, the term “Diversification” has become an increasingly prevalent buzzword within agricultural press and media.

What is farm diversification?

Farm diversification encompasses attempting to generate new income streams into the farming business through the creation and introduction of both agricultural and non-agricultural enterprises. All farm businesses are different. As such, the creation of new enterprises must be bespoke and well considered. There really is no “one size fits all” solution. Because of this, it can be difficult to know where to start. Read on for a breakdown of things to consider surrounding diversification.

What enterprise suits you and your farm business?

Before attempting to create any venture, it is important to do a desk study to ensure its viability. Ultimately, to create the parameters of available opportunity, you must be sure of the following:

What interests you? What would you like to have or not have on your farm?

• Enterprises you have a real interest in will be much more likely to be successful add value to your core business.

What is your wider business strategy?

• Is there a wider diversification strategy within your farm business. For example, a food or retail brand? It’s important to maintain brand consistency and focus towards an end vision.What resources are available on your farm?

• Every farm is different. What skillsets, buildings, land or machinery is currently present on your farm?

What level of involvement can you afford?

• Do you want to be directly involved in the operation of an enterprise?
• Can you afford to take time away from the core business?
• Is rent taking or a joint venture more appropriate?

Is there a demand? Have you evaluated the local competition?

• Location and demographics are vital when considering a farm diversification.
• What are local businesses offering?
• How can you differentiate your offering?
• Product vs experience based enterprises.

What is your investment budget?

• How much can you afford to invest into the creation of a new venture?
• Have you access to further capital?

What is your target return on investment?

• What is an acceptable return on investment or payback period to you?

What is your timescale for project completion?

• When do you want the enterprise to be up and running?
• Is it better to use subsidy income to support creation of new ventures whilst its still available?